CFTC No-Action Letter on the Pay-to-Play Rules for Swap Dealers

The CFTC Division of Swap Dealer and Intermediary Oversight ("DSIO") issued a no-action letter on the pay-to-play rules applicable to swap dealers who conduct business with certain governmental special entities. The rules in Commission Regulation 23.451 restrict a swap dealer from engaging in certain activities with a governmental special entity if the swap dealer (or a covered associate of the swap dealer) made or solicited contributions to an official of that governmental special entity during the preceding two years, with limited exceptions. The no-action letter provides relief to swap dealers and their covered associates for making certain contributions to the officials of certain special entities that may otherwise fall within the scope of Regulation 23.451 in two respects:

(i) "governmental plans," as defined in ERISA, are carved out from the CFTC's prohibition (which has the effect of bringing the CFTC rules into harmony with those of the SEC and the MSRB); and

(ii) newly registered swap dealers are not required to look back to contributions made before the date on which the entity was required to register as a swap dealer.

Cross-Reference(s): CFTC Rule 23.451 [Political Contributions by Certain Swap Dealers].

View No-Action Letter 12-33 here (links externally to CFTC website).